Squaring the Circle and Regulating the IP Profession in Israel

I was privileged to participate in a ’round table’ at the Israel Patent Office on Tuesday, on the topic of regulating the Patent Attorney profession. In this article I am going to refer to people without giving their titles such as Dr, Adv. and Patent Attorney, since most people were entitled to two or three such terms, but some aren’t and I don’t want to misrepresent anyone.

Perhaps instead of round table, Quad or Quod would be a better term as there was no table in evidence, and the chairs were laid out in a square, with the Commissioner Asa Kling, Assistant Commissioner Jacqueline Bracha and a legal liaison person from the Ministry of Justice along one side; the various patent attorneys and the odd lawyer present, being arranged along the other three sides in an open ח shape.

The lack of a table and the open square was, in my case, a little distracting, as opposite me was a peroxide blond streaked patent attorney in a dress with slits up both sides who kept crossing her legs and seemed to be appealing to my Basic Instinct.

Kfir Luzzatto was looking younger than ever, and seemed to have restored his hair by self-hypnosis and meditation. I was thinking that his wife Etty was looking young enough to be his daughter and must also be using self-hypnosis and meditation, and then realized that it was his daughter, Michal, who is the fifth generation of this family firm.

There was a healthy sprinkling of sole-practitioners and senior partners of smaller offices, including Ed Langer, Daniel Feigelston, Simon Kahn, David Agranot, myself, Sinai Yarus and Erez Gur.

There was a number of representatives of Reinhold Cohn including Ronnie Benshafrut and Michal Hackmey. Gal and Amit Ehrlich and Maier Fenster represented their practice, there were some representatives of the Ministry of Justice, Tal Sines from Haddassit, someone from the tech transfer company of one of the universities, and a transcriber who taped the entire meeting. Unfortunately, Ofir Alon of the Technion tech transfer company who has just been appointed the new Commissioner of Patents was absent.

The meeting was friendly and constructive. It highlighted the general perspective of the larger firms that comprised attorneys-at-law and patent attorneys but could not have both as partners and needed creative solutions to practice, versus the smaller firms that felt that some of the regulations under discussion would make it difficult or impossible for them to continue as sole-practitioners.

It seems that whether or not someone works in a large or a small firm reflects their character and the type of service they like to offer. It is not an indication of ability and does not reflect earning power either. There is a similar Gaussian distribution of abilities amongst practitioners in both types of practices. Both types of practitioners were concerned by incursions into the profession by US firms and by various self-styled patent experts who were not licensed or regulated. Some of this concern may genuinely reflect concern regarding the service received by the public, but to a greater or lesser extend, also reflects fears for patent attorneys’ earning potentials.

Legal Ethics and Business Ethics are not the same thing. I believe this proposed regulation is an opportunity to ensure proper training of trainee patent attorneys and to prevent their abuse by not paying salaries. It is also a possibility to require ongoing training which I believe will improve standards and is in the public interest. It was clear that this was far from the agenda of the larger firms who were interested in the patent attorneys being bound to a similar code of conduct to that obliging attorneys-at-law, which is much more concerned with the dignity and ambience of the profession than with standards at such.

Possibly some patent attorneys are generally politically against central regulation and believe in self-regulation, whereas others favour strong central government. A very large number of patent attorneys in Israel are religious Western immigrants who are, I daresay, generally republican/conservative. This has been noted by Adi Levit in his half- autobiographical novel OMG and seemed to characterize most of the sole-practitioners present at the round table. On the other hand, the larger firms are mostly run by secular Israelis whose parents or grandparents established the firm in an earlier period. I suspect that many of these lean towards central regulation in general and believe it is desirous and necessary in all industries.

Another way of looking at this could be that there are those that need to feel part of a club and band together in larger firms. Such people need titles, status and recognition. Others are more self-confident and individualistic and are thus more likely to set up their own firm and don’t need uniforms.

Aping the Legal Bar

Broadly speaking, the Reinhold contingency, supported by Kfir Luzzatto, wanted the profession to be put on the same legal footing as law firms, thereby enabling lawyers and patent attorneys to be partners. Reinhold Cohn solves this problem by being a group comprising a Law Firm and a Patent Firm. Kfir’s daughter is an attorney-in-law but not a patent attorney, and therefore cannot be a partner of the patent firm.

The sole practitioners, whether also lawyers or licensed attorneys-at-law, did not want the outdated and restrictive Code of Ethics for lawyers to be binding on patent attorneys. They felt that the restrictions would work in favour of the larger firms and squeeze out the sole practitioners or force them to band together.

The cynics would argue that this was an intentional move by Reinhold Cohn, but I prefer to think that different practitioners with different types of businesses have different perspectives. Some patent attorneys have worked in industry and like to interact with scientists and technical people as equals. They don’t want to wear black suits, white shirts and black ties and to wheel a leather pilot’s case trolley to meetings. They don’t need these status symbols to seem professional and competent because their wide-ranging technical knowledge and obvious intelligence attracts more work than they can handle anyway. I can see a patent-attorney wanting to set up shop in a “We Work” type of trendy open-plan shared-beer-and-coffee type of office space with a staircase going nowhere in particular in the middle, positive slogans on the wall and both armchairs and coffee tables and conference rooms for meetings. Why shouldn’t someone be able to work from or meet clients in such a place because lawyers have decided that they shouldn’t and a large firm with several addresses needn’t?

Training

There was a general feeling that trainees applying for professional licensing were not ready and that the oral exam was not consistent in duration and standards, with past examiners themselves noting statistics regarding parole boards being less likely to grant paroles before lunch or at the end of the day. Cila Hess-Milutin spoke of the poor standards of candidates, and Gal Ehrlich felt that trainees should have 7 years experience before meeting clients. There were no trainees present, nor were there any recently qualified patent attorneys. Some patent attorneys consider that the current regulations regarding the amount of experience needed to mentor trainees was insufficient. There was also an attempt to argue that only large practices could give trainees experience in all fields.

In the break I noted to Benshafrut that 12 years ago when I first set out independently, a former very good friend who had some training from a newly-licensed practitioner who had struck out on his own, and who wasn’t happy with the level of work of that firm, interviewed with me and also with Reinhold Cohn, the largest firm, and made the not unreasonable decision to go to Reinhold Cohn to train. However, three months later he phoned me and said he felt he’d made a mistake and asked me to mentor him. I took him on as a favour since he was an old friend from my teenage years. I took the responsibility seriously, exposing him to all aspects of my practice and tried to help him with the theory, lending him books and discussing all aspects of IP law with him. He duly qualified and now has his own firm. Obviously Reinhold Cohn has the resources to expose trainees to all aspects of the profession and am sure that had he stayed there, he would have eventually qualified. However, it seemed that the person who was assigned to mentor him was busy with other things and he was not getting the timely feedback or the experience he wanted there. The patent attorney in question now has his own firm. Clearly, therefore, smaller firms and sole practitioners can provide adequate training.

Michal Hackmey, who briefly indirectly mentored me at Luzzatto et Luzzatto used to say that one can learn from every case. I think that all practicing patent attorneys are continuously learning and the more experienced the mentor, the better. The licensing qualification, is, however, supposed to be a minimum qualification. I think it is at the right level.

Benshafrut expressed surprise and dismay that apparently there are trainees that don’t earn a minimal wage. Those training at Reinhold doearn a basic salary which is reasonable (though apparently steady for the past 10-15 years). They also get structured training. However, there are other firms that pay percentages of billing, but cull off from the x% of the billing promised at the interview, percentage cuts to the trainer / mentor, and the trainee can end up working for months for nothing, and gets precious little training as well since such firms operate on a hire-fire principle and don’t invest in teaching their trainees anything. Indeed, they tend to intentionally not expose them to various aspects of the profession to stop them striking out on their own.

Ehrlich, who advocated standards and training, played a different tune when I had the misfortune to work for him for a few months before qualifying and was fired when I had reserve army duty. Over the three months I worked there, a secretary was made redundant when she went into hospital for a hysterectomy. Apparently she was not much good anyway.

Whereas a percentage system, if fairly applied, is a good way to compensate licensed practitioners, it is inappropriate for trainees. A number of firms engage patent attorneys as sub-contractors who are self-employed an issue tax invoices. They are, however, bound by clauses that prevent them from working independently or for other firms. The ’employer’ is not obliged to provide as much work as the sub-contractor can do, and rather than firing, the employer simply dries the employee up. I think that regulating the profession should involve regulating such practices.

Limited liability?

Benshafrut and other Reinhold employees who were pushing for wholesale adoption of the Code of Ethics for Lawyers felt that little could be done by the profession to regulate training and conditions of trainees and employees, but the real issue was for the profession to adopt the code of ethics binding on attorneys. Gal Ehrlich pointed out that he, like many patent attorneys operate as limited companies to protect their families from legal liabilities for mistakes. Attorneys-at-Law cannot do this. Kfir Luzzatto responded that the Code of Ethics for lawyers is indeed dated, but perhaps we should accept it as a package. However, I note that at some stage, Luzzatto et Luzzatto spun off a limited company called Elandel (L & L) that handles their renewals. this was an attempt to protect him and his from just this issue.

Ongoing training

I have every reason to suspect that many licensed and experienced attorneys would not be able to sit the current oral exam and pass. They are mostly competent at what they do, but have little knowledge about other aspects of the profession. The laws and regulations change from time to time and certainly those that offer advice and consult to entrepreneurs should keep up to date. Many patent attorneys do not handle designs or trademarks, for example. Others do not handle oppositions or opinions. A number of sole-practitioners refer to my firm various types of work that they feel uncomfortable doing. I don’t believe that everyone needs to practice all areas of IP. However, I do believe that people should keep up to date with the basics. A patent attorney should know about Madrid Protocol to advise clients regarding trademarks even if they out-source such work.

Oddly, there was little interest in compulsory ongoing training. However, I think this is a shame. A license is not a license to stop learning, and I am forever reading professional literature and attending conferences. I am in favour of ongoing professional training. There is an excellent conference at the end of the month that is organized by Kim Lindy called Best Practices Intellectual Property 2017. The cost is very reasonable, in that it costs about the same in Shekels as similar events abroad cost in dollars or Euros, there is no flight or hotel expenses. The food is Kosher. I will be attending. Based on previous years however, I doubt many sole-practitioners will be attending. Nor will larger firms send their junior practitioners or trainees to learn something. The senior partners are too busy or too proud to attend events unless they themselves are hosting them. I think this is a shame. Kim’s conference is a quality event on our doorstep. IP managers in industry do attend from year to year; including those that are licensed attorneys and patent attorneys. They presumably learn something.

Incursions to the profession

There was wide consensus amongst those in attendance that the unlicensed practitioners were doing damage to the wider public. However, paralegals offering renewal and other services to inventors, prior art searchers, patent specification drafters, patent drawing draftsmen, experienced prototypers offering patent services and possible funding, IP managers and other non-licensed practitioners were not present. I am not convinced that all these service providers are bad for the economy, albeit clearly bad for the profession. the current legality or otherwise of all such service providers is not clear. I think it should be.

There was also broad concern about US firms setting up offices locally and aggressively cherry-picking clients. Particularly as some representatives of one such firm has disparaging things to say about the abilities of Israeli practitioners in general and acts in a way wholly contrary to the voluntary code of ethics of the IPAA that Kfir Luzzatto drafted. Dan Feigelston pointed out that such lawyers don’t pay tax here, don’t send their kids to the army here and don’t know anything about Israel Law. He is right. the real problem is that they use marketing techniques that Israeli firms consider unethical. They are not playing on the same field.

The specific elephant not in the room was Finnegan which is a 500 partner US firm that has set up offices here. Their local partner Gerson Panitch claims that international rules governing law firms apply and there is nothing wrong with what they are doing. However, the law governing foreign law firms requires them to follow the local code of ethics for the Israel Bar. Finnegan advertises on the Internet in a manner that is not compliant with the code of ethics for law firms. They also actively solicit clients in a way that is not considered ethical. From their recent gleeful campaign that states that ‘Finnegan helps leading Israeli machine vision companies’ it would appear that they have a far more lenient position regarding conflicts of interest than other US patent firms. Since one cannot tell which of their 500 partners and other staff will work on one’s IP, it seeems to me that it is much safer working with a firm that takes conflicts seriously. Israeli attorneys will ensure that the US associate handling a client’s case will not have a conflict, and for this reason we all work with a number of different associates.

We note, however, that foreign firms setting up shop and bending the rooms is a two-way street. For example Zeev Pearl is the named, managing partner of the NY office of Pearl Cohen, and gives advice to US clients that is not restricted to Israel Patent Law, despite not being licensed in the US. A complaint was filed a month ago in the US against another Israel Law firm that handles IP and has written professional opinions and provides legal services to firms where its partners are also directors.

There is certainly a problem that such cowboys are not bound by the patent attorney code of ethics and not subject to disciplinary action when they screw up. However, it transpired that more than half of the licensed patent attorneys in Israel are not members of the voluntary Professional Association – the IPAA. Some do not want to be bound by the voluntary code of ethics, and there are firms headed by Attorneys-in-Law that consider themselves to be patent attorney firms to avoid the restrictions of th Israel Bar. However, I suspect that the low membership of the IPAA is largely due to the way the organization conducts itself and the way the big firms sew up the elections that are held with little notice, rescheduled and then a single representative of a large firm polls 40 proxy licenses at a general meeting with 12-15 participants present, effectively determining the results. As a voluntary organization, the IPAA needs to provide services to the profession to attract and maintain members. It needs to provide added value. If the organization becomes statutory and has an eq1uivalent status to the Israel Bar this will change, but at present, the profession has voted with their feet.

There was an interesting debate on patent attorneys doing things that perhaps attorneys at law should. I pointed out that even preparing a standard assignment document was arguably an activity reserved for attorneys that patent attorneys should not handle. Benshafrut noted that in Reinhold |Cohn, attorneys-at-law handle such things. Arguably the legal department of a patent firm should be providing legal services to the patent firm and not to its clients. The Reinhold ‘Group’ solution is one solution, but I do NOT think that patent attorneys should be forced to team up with attorneys at law in groups in order to prepare assignments, Powers of Attorney, and other ‘legal documents’. Regulating the industry should make it clear that legal services and consulting about IP related issues are within the package of services patent attorneys can provide.

Veteran Patent Attorney, Michal Hackmey (partner at Reinhold Cohn), who sits on a complaints committee with former Commissioner Meir Noam and with Sandy Colb, gave a survey of the activities of the committee, and it seems that the committee has little teeth and can hardly sanction licensed professionals. A representative of a university tech transfer office who had an issue about professional malpractice of an Israel patent attorney who gave a legal opinion about a patent that he himself had drafted, explained that she didn’t file complaints to the committee as it was not clear whether their rulings would be confidential or not. Since neither Michal Hackmey nor the Ministry of Justice representatives could provide a definitive answer on whether hearings would be closed-door or published, it seems that her reticence was appropriate.

The problem seems to be that until, as a profession, Licensed Patent Attorneys are properly regulated, complaints about unlicensed practitioners at both ends of the spectrum seem somewhat hollow. I don’t know if all the incursions are against the public interest and not just against Patent Attorney interest. Maybe with basic laws of freedom of occupation, a more open approach is desirable. However, I do think that a lot of the cowboy practitioners are paralegals or half-trained patent attorneys that were used and abused by one of the IP firms and then struck out on their own. They are monsters created by the profession.

Conflicts of Interest

What was noticeable was that the very real issue of conflicts of interest was not discussed at the round table. Attorneys that deal with criminal law, wills and probate and many other fields only have a conflict in representing opposing parties, and certainly serve many clients doing essentially the same thing. Indeed, in Israel it is legal for a lawyer handling conveyancing (real estate) to represent buyer and seller. In IP, the issues of Conflict are considered broader. Certainly by reputable firms in the US.

In the past, some pharmaceutical firms have sent work to various firms to create conflicts and burn dangerous litigators. This is arguably abuse of the system. Ironically, whilst at the meeting, I had an incoming patent application to be filed into Israel referred to me by my ex-partner Jeremy Ben-David who wouldn’t take the case as he had a conflict. Thus some of us take conflicts seriously. After the round table closed, I had a lively discussion with Maier Fenster about what is or isn’t a conflict of interest. I think that any proposed regulations should clarify this issue.

Reciprocal Licensing?

One interesting idea that came us is that the US has cross-licensing agreements with Canada and apparently is willing to allow such cross-licensing agreements with other jurisdictions. A similar arrangement exists between Australian and New Zealand. If US attorneys could get licensed in Israel and Israel attorneys to get licensed in the US and these practitioners would be subject to the code of ethics of the new jurisdiction, this could be a fair solution. Some Israel patent attorneys are US citizens and hold US licenses. Many more of us could become licensed if we could legally sit the exams. I think a reciprocal relationship, but one requiring taking the exams and showing language proficiency, could be in the interest of all.

In my experience, whether a patent attorney has incentives to take the time to teach an intern (and what exactly the intern is motivated to learn) has a much greater influence than how qualified the patent attorney is to teach or for how long the intern needs to learn.

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